Millionaire Demographics
Welcome back to the third part of the series on building wealth and the new millionaires. Today we focus on millionaire demographics.
If you haven’t read the first two articles in the series, do that now. Part 1 introduced you to 5 key strategies from Dividends Diversify to Build Your Wealth.
Part 2 introduced you to my mini-research study on the new millionaires. The point is to see what we can learn from them. And, what we can learn about them.
What Is The Approach?
I’m comparing today’s millionaires with those highlighted in the book, The Millionaire Next Door. In addition, I am comparing what I learn about their habits to my 5 wealth building principles at Dividends Diversify.
My sources included the following:
- personal finance websites
- wealth management and encore feature sections in the Wall Street Journal
- blogs
- investor profiles provided by mutual fund companies
- discussions with family and close friends
- academic research
- a few associates I consult with regarding their money
After collecting the data over the past year, I put it all together and created a set of Dividends Diversify new millionaire statistics.
Are my sources and research methods perfect? Probably not. Are they statistically valid? No.
Rather, I think they are credible enough to learn a few things and draw some conclusions about millionaires these days. I call them the new millionaires.
So to become a millionaire, let’s learn about them.
New Millionaire Demographics
Here is some demographic information on the group I studied:
Marital status: 90% married; 10% divorced and now single. Those married have been so for an average of 18 years.
Average Millionaire Age: 46 years old with a range from the mid-’30s to the upper 50’s.
Where they live: Mostly in US urban population centers. Some in the city, most in suburbs. A couple of study participants lived in mid-size towns. No one considered themselves living in a rural area.
Working: Yes. At least one partner in the household was working full time. In about 30% of the households, the 2nd spouse was also working. They work for more than money but also the abundance mentality work creates.
If the 2nd spouse was not employed, they were usually a stay at home Mom or Dad. Despite being millionaires, no one considered themselves retired.
Occupation: The overwhelming majority were Corporate professionals. They ranged from managers, directors and senior executives.
None owned their own business as their primary source of income. A few had small business initiatives on the side. They mainly consisted of rental properties. There were a few other types of occupations represented like doctors, lawyers, and accountants.
State of mind: Upbeat about money and life
Kids: 90% had children. 2-3 was the norm.
Homeowners: 100% owned their primary residence.
Related: Millionaire statistics from the book Everyday Millionaires
Net Worth
The definition of net worth is all assets including primary residence minus liabilities including any mortgage on that residence. On average, the group had a net worth $2.8 million.
One outlier was greater than $10 million. If you drop them out, the average was $2.3 with a range from a little over $1 million to less than $5 million.
Millionaire Demographics – Active Income
The average household had an active annual income of a little over $300,000. Active income means earnings from their job or active money pursuits like managing rental properties. It does not include passive forms of income from dividends and interest.
Comparisons To The Millionaire Next Door Demographics
On average, here’s how my study group (DD study) compared to the demographics from The Millionaire Next Door (MND Book) published in the mid-1990s:
| Demographic | DD Study | MND Book |
| Millionaire households in the US | 11.8 million | 3.5 million |
| Average Age | 46 | 57 |
| Retired | 0% | 20% |
| Self Employed | 0% | 67% |
| 2nd Spouse Works | 30% | 50% |
| Average Income | $305,000 | $247,000 |
| Average Net Worth | $2.8 million | $3.7 million |
| Median Net Worth | $2.3 million | $1.6 million |
| Homeowner | 100% | 97% |
A Broader View Of Millionaire Statistics
Before drawing conclusions, I also want to offer up a broader financial perspective of millionaire demographics and statistics. You may be asking how many millionaires are in the US?
This is according to The Spectrem Group’s Market Insight report. In 2018, the number of millionaire households in the US with a net worth of at least $1 million was 11.8 million. Source: Spectrem Group
Also, in 2018, there were 127.6 total households in the US.
Source: Statistica – number of US households
Doing some simple math that means only 9 out of every 100 households in the US has reached millionaire status. You can then conclude that the odds of becoming a millionaire in the US is about 9 chances out of 100 or 9%.
I wanted to give you that broader view to think about, but let’s get back to comparing the new millionaires from my study to the Millionaire Next Door.
Millionaire Demographics – Conclusion
The DD study group of millionaires is younger and they earn more money in different ways.
Millionaire Earnings & Net Worth
Earnings levels probably have a lot to do with inflation. But, they have a lower net worth. Being that they are younger, they have time to catch up. They have not enjoyed the extra 11 years of compounding like the households in the MND.
Related: How to become a millionaire on minimum wage
Fewer Millionaires Are Self-Employed
It appears today that more millionaires are corporate professionals. With more than 4 times as many millionaire households in the US today, they had to come from somewhere.
The corporate world is producing a higher share, in my opinion. The rise of the technology sector alone has to account for many Corporate professional millionaires. The likes of Microsoft, Apple, Facebook and Alphabet barely existed at the time of the MND research. Like most people with money, these millionaires started with nothing.
In addition, the economy is now more globalized. Career skills are more advanced and specialized in some cases. Advanced management and technical skills likely pay more than the more homogeneous Corporate skills demanded in the ’70s, ’80s and 90’s when the MND research was performed.
A Reduction In Working Spouses In Millionaire Households
With the rise of the dual-income family over the past couple of decades, I was surprised to see a reduction in working spouses. And even considering the substantial wealth, every household had at least one working partner.
Be sure to read all the articles in this series:
- Build Your Wealth | Part 1
- The New Millionaires | Introduction | Part 2
- The New Millionaires | Demographics | Part 3
- The New Millionaires | Income & Net Worth | Part 4
- The New Millionaires | Income versus Expenses | Part 5
- The New Millionaires | Concluding thoughts | Part 6
What do you think about these millionaire demographics? Did any surprises from the data pop out at you?
Mr Defined Sight says
Hey Tom, cool stats here. I’m surprised there weren’t any self employed folks in your survey. I thought that is where the money is? 🙂
Tom says
I will admit my sample wasn’t perfect Mr. DS. The self employed are out there, but I don’t think they are as big a piece of the pie as they used to be. I think much of the growth in the millionaire population has come from those climbing the corporate ladder. Tom
Alex says
This is doesn’t seem right to me. According to statistica, one of your sources, 75% of the 3% of US population considered millionaires are sixty years old or older. Roughly 99% are older than fifty. I know this is a couple years old, but that info is from 2017.
Tom says
Hi Alex. Thanks for commenting and clarifying your thoughts. The stats you quote are right on. On the other hand, the point of this article was to highlight some informal research that I did. And compare what I found to the book, Millionaire Next Door. Furthermore, to better understand the approach to and odds of becoming a millionaire at a younger age than average. All in hopes of (as an individual) beating the statistics from the broader population that you site. Tom
SMM says
I think the self-employed or entrepreneur folks are the mega/multi-millionaires. There are fewer in terms of households, but the net worth is way up there; at least from what I’ve read on a different trusted blog post. 🙂
Tom says
I do think you are right again SMM. A lot of readers have commented that my study doesn’t include any self employed. That was partly the data I accessed and partly the fact that the “new millionaire” class those with $1-3MM in assets are heavily represented by people in the Corporate world. Tom
Steveark says
That fits me, corp career, stay at home wife, 3 kids . Except I retired early and live in a rural area.
Tom says
Hi Steveark, Agree with you. From what I have read on your blog, your characteristics are very similar to the “new millionaires”. Tom
Miguel (The Rich Miser) says
Hey Tom,
I was surprised at the lack of entrepreneurs in the group. My impression is that the upper middle class and wealthy are comprised primarily of professionals, executives, and successful entrepreneurs.
An observation, from the executives I know: some that have highly regimented, corporate-ladder jobs seem more vulnerable to “lifestyle inflation” pressures, and sabotage their wealth-building with clothes, jewelry, and cars. I don’t know if it’s something about the corporate environment (or maybe even more prevalent here in Miami, which can be flashy), but I’ve been noticing it lately.
Cheers,
Miguel
Tom says
When we get to the spending analysis Miguel, you will see these folks save a ton of money. They don’t scrimp on things that have value in their minds, but also save a lot of their incomes. Tom
Steve says
Nice stats Tom,
I am surprised 0% self employed I would have expected more like The Millionaire Next Door at 67%. The other stats seemed reasonable to me. looking forward to part 4.
Tom says
Yes. That seems to be the big surprise. Probably part from where I got my data and part that corporate wealth has come along ways over the past 20-30 years. Tom
Helen says
Tom,
That’s a lot of research you did. Great job! It’s interesting to know, the home ownership is that high. I just wonder, how much equity those millionaires have in their primary homes. It’s also good to know the average age, and income, very interesting data. Thanks a lot for sharing.
-Helen
Tom says
Hi Helen, Welcome to Dividends Diversify and thank you for commenting. That’s a great question. In next weeks post, I am going to break down their net worth. Overall, home equity is smaller percentage of the pie. Most of their money is in financial assets. Tom
Mr. ATM says
Nice.!!! My old company Intel is churning out more millionaires today. Thanks to the stock.
Specially, in tech a big chunk of total compensation is made up of stock grants, so when company and it’s stock does well, so does the employees.
Tom says
Yes. That makes a lot of sense to me Mr. ATM. I think the tech world has created many millionaires over the past 20 years. Tom
Dividend Daze says
Interesting study. Seems the average age is going down. I am sure the FIRE movement has a little to do with that. Although it is fastening that 0% are retired or self employed.
Tom says
Hey Daze, With the money these folks have I was surprised they were all still working too. Partly due to their young ages that you mention. Have a great weekend. Tom
fin$avvypanda @ finsavvypanda.com says
Hey Tom!!!!
Nice stats here! I enjoyed your previous post as well.
Like everyone else, I am surprised that 0% are self-employed in your data! What happened there? lol.
Given today’s age, it also appears as if a lot of millennials are taking on a few side hustles (outside of RE) that increases their income.
I agree that the rise of tech sectors has given a lot of excellent employment opportunities for our generation today. They also have great benefits and perks for their employees where they can take advantage of!
Tom says
Many good points you make Ms. Panda. I think one of the things that rings true is the rise of this new Corporate class of millionaires that was much less represented in the Millionaire Next Door. Tom
GYM says
I like your study! Interesting stats.
The DD sample is obtained from this population?
-personal finance websites
-wealth management and encore feature sections in the Wall Street Journal
-blogs
-investor profiles provided by mutual fund companies
-discussions with family and close friends
-academic research
-a few associates I consult with regarding their money
I think the 0% self employed is an anomaly with all due respect. I often think that blogs are misrepresented of FIRE. I mean, people that are self employed are usually more passionate about their work than people who ‘work for the man’ hence a less need for FIRE. I am surprised by the corporate class and average household income– people are very well paid out there! Does your sample size include CEO compensation and does that skew the average?
Tom says
Hi GYM, One of the points with the series was to highlight a new millionaire class. One different than the millionaire next door where 2/3 were self employed. It is much more represented by a group that has climbed the corporate ladder. As I mentioned in the the introductory post, my study is far from statistically valid. There were no highly paid CEO’s in the group to sku the average. Mostly managers, directors and VPs and yes they make a lot of money. They have really focused on building their careers. Tom
GYM says
Hehe oh yes! Sorry my short term memory is not very good, I blame it on sleep deprivation 😉
Tom says
Not a problem GYM. I’m a complete mess if I don’t get enough sleep. Tom
Ms ZiYou says
This is interesting – but surely if they are all married, you need to half the net worths? Or have they already been halved?
I suspect your sample is very self-selecting, from those that publically make these things available, whereas I believe the mIllionaire next door did the full investigative journalist piece and saught people out what would not identify as millionaires.
Tom says
Hi Ms. ZiYou,
The study is based on household net worth be that one or multiple people in a household. That is similar to the Millionaire Next Door and most macro statistics released on net worth in America.
As I said in my introductory post, my research was far from statistically valid. I recognize that. I do, however, think the millionaire demographic has changed a lot over the past 20-30 years and that is one of the points of the series.
Tom
Lily | The Frugal Gene says
This fits us as well. But we’re on the young stages of it. $1.1 m and hubby’s 30. He works full time and I work from home. We’re homeowners. Our income wasn’t quite $300 last year but it’s $250ish which is closer than not. No kids yet but maybe in 5 or 10 years.
Tom says
Hi Lily, Congrats. You and your family are doing awesome. Thanks for sharing your stats. Tom
SMM says
This makes sense. People that work in the corporate world have monetary incentives like year-end or performance bonuses. Depending on where you rank these could be in the tens of thousands or much much more.
Incentives like these are usually not offered in the public sector.
Tom says
Very true SMM. Good point. Tom
Frankie @ Fully Franked Finance says
100% homeowner stat is interesting, but not hugely surprising I guess – especially here in the Australian capital cities, if you’re just paying rent for many years you’re falling behind very quickly! Get that one key asset under your belt and you can put any extra savings away to other investments while your home value almost certainly grows in the background over the long run.
Tom says
Hi Frankie, Home ownership cuts both ways in my mind. Do it right and it can be a manageable expense. Over purchase and it can be quite a financial burden. Tom
Frankie @ Fully Franked Finance says
Yes fair point Tom – especially with interest rates so low, and prices so high, it’s easy for people to take on more debt than they can handle. I was unfairly assuming that people are sensible when making significant investments like this…
Tom says
I understand Frankie. I think that’s a fair assumption for the folks like you that visit here. Just not everyone. Tom